Exhibit
10.11








December
8, 2008











Mr.
Jeffry E. Sterba


Chief
Executive Officer


PNM
Resources, Inc.


Alvarado
Square, MS 2824


Albuquerque,
NM  87158





Re:           First Amendment to the Retention
Bonus Agreement




Dear
Jeff:





On August
30, 2007, you entered into a Retention Bonus Agreement (the “Agreement”) with
PNM Resources, Inc. (the “Company”) pursuant to which you are entitled to a
payment if you remain employed by the Company until March 1,
2010.  The payment provided under the Agreement is considered
“non-qualified deferred compensation” that is subject to Section 409A of the
Internal Revenue Code of 1986 (“Section 409A”), unless an exception
applies.  The Company has structured the payment to fit within the
short-term deferral exception to Section 409A.




The
Internal Revenue Service has issued informal guidance with respect to payments
on a termination of employment due to disability such as the payment pursuant to
Section 5 of the Agreement.  The Company has determined it is
necessary to amend Section 5 of the Agreement to address the issues raised in
the Internal Revenue Service guidance and to minimize the risk of a Section 409A
violation.  In light of the foregoing, the Company proposes to amend
the Agreement as follows effective as of January 1, 2009:




Section 5
(Payment of
Bonus) of the Agreement is hereby restated in its entirety to read as
follows:




If you
are employed by the Company on March 1, 2010, payment of the Retention
Bonus will be made to you in two equal installments.  The first
installment will be paid to you on March 1, 2010.  The second
installment will be paid to you on March 1, 2011.  If your
employment is terminated by the Company without Cause or you terminate your
employment due to Constructive Termination, the Retention Bonus will be paid to
you within thirty (30) days of your termination and in no event later than two
and one-half (21⁄2) months following the end of the calendar year in







which
your termination of employment occurs.  If you die or become Disabled,
the Retention Bonus will be paid to you within thirty (30) days of your death or
the date on which you are deemed to be Disabled and in no event later than two
and one-half (21⁄2) months following the end of the calendar year in which you die
or are deemed to be Disabled.  You will be deemed to be Disabled as of
the last day of the third month following the date on which you commence
receiving income replacement benefits pursuant to the Company’s long-term
disability plan.




This
First Amendment amends only the provisions of the Agreement as set forth herein,
and those provisions not expressly amended by this First Amendment shall
continue in full force and effect.  Notwithstanding the foregoing,
this First Amendment shall supersede the provisions of the Agreement to the
extent those provisions are inconsistent with the provisions and the intent of
this First Amendment.




If you
are in agreement with the terms of this First Amendment, please so indicate by
signing and returning to me the enclosed copy of this letter, which will
constitute our binding agreement.




Very
truly yours,





PNM
RESOURCES, INC.











By: /s/ Bonnie S.
Reitz


Bonnie S.
Reitz


Chair of
the Human Resources & Compensation Committee




AGREED:
















/s/ Jeffry E. Sterba                    
December 8, 2008


Jeffry E.
Sterba                                                                          
 Date


Chief
Executive Officer


76003.9038\MEYERA\SWDMS\9289623.1